Asia Pacific Market: Stocks perk up on China stimulus hope

Asia Pacific share market advanced on Wednesday, 23 December 2015, as risk sentiments boosted up amid growing investor confidence in the U.S. economy after encouraging US economic data and renewed stimulus chatter from China.

The positive finish of the U.S. markets overnight set a tone for regional markets today. Wall Street rallied across the board on Tuesday after oil prices recovered slightly and data showed that the U.S. economy grew at a fairly healthy clip in the third quarter. Earlier on Tuesday, the U.S. Commerce Department trimmed third-quarter economic growth to a 2% annual pace from the 2.1% estimated earlier. The Dow Jones industrial average ended up 0.96% at 17417.27. The S&P 500 gained 0.88% to 2038.97 and the Nasdaq Composite added 0.65% to 5001.11.

The US economy grew at a fairly healthy clip in the third quarter as strong consumer and business spending offset efforts by businesses to reduce an inventory glut, underscoring its resilience despite a raft of headwinds. Gross domestic product grew at a 2% annual pace, instead of the 2.1% rate reported last month, the Commerce Department said in its third estimate yesterday.

Sentiments also boosted up on hopes Beijing will push fresh reforms following a weekend policy meeting. Chinese government officials have cleared the way for fresh stimulus measures to halt the worsening economic slowdown in the World’s second largest economy. At the close of a key meeting of China’s Communist leadership on 21 December 2015, the government announced a series of reforms, including plans to make China’s monetary policy more flexible and to expand the government’s budget deficit next year. The raft of measures is expected to provide much needed to support to a painful slowdown in the house building sector in China.

The announcement is the latest from Beijing after it promised last year to let the market play a bigger role in the world’s No. 2 economy and implement reforms of bloated state-owned enterprises. It also follows other moves to kick- start slowing growth, including six interest-rate cuts since November last year.

Among Asian bourses

Australia market extends gain to sixth day

Australian share market advanced for sixth-straight session, as appetite for risk assets boosted up amid growing investor confidence in the U.S. and Chinese economies. Total eight out of ten ASX industry group rallied, with shares of material and energy sectors leading advancers. At the close, the benchmark S&P/ASX 200 index ended 25.10 points, or 0.49%, up at 5141.80 points, while the broader All Ordinaries index grew 25.80 points, or 0.5%, to 5193.50 points. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, declined 5.13% at 15.99, suggesting 4.6% swing in the equity benchmark index in the next 30 days.

Shares of energy and material sectors were top performers among AS 10 industry groups, as investors continued hunting for heaving battered stocks following recent selloff amid a prolonged rout in oil prices and plunge in base metal prices. U.S. oil prices remain down more than 32% for the year but climbed 0.9% to $36.14 a barrel on Tuesday in New York. Copper added 0.3%, while gold rose 0.2% to $1,074.03 an ounce. Origin Energy led Australian energy stocks higher, adding 3% to close at A$4.51. Oil and gas producer Woodside Petroleum rose 1.1% to A$27.59. Worley Pearson climbed up 3.9% to A$4.59. Global miner BHP Billiton was up 3.5% to A$17.41 and rival Rio Tinto gained 4.2% to A$44. Smaller iron ore player Fortescue grew 2.9% to A$1.79. Gold miner Newcrest Mining added 1.7% to A$12.80.

Financial shares were also climbed, with big four banks leading rally. Commonwealth Bank of Australia added 0.5% to A$82.05, National Australia Bank 0.8% to A$29, Australia & New Zealand Banking Group 0.8% to A$26.88, and Westpac Banking Corp 0.2% to A$32.06.

China market falls on profit booking

The Mainland China stock market ended softer after washing out initial gain late afternoon, due to profit booking after the benchmark indices surged to highest level in four-months yesterday. Total 8 out of 10 SSE industry groups declined, with shares of telecom, technology, and material issues led losses. The Shanghai Composite Index decreased 0.43%, or 15.68 points, to close at 3636.09. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, declined 1.2%, or 28.56 points, to close at 2351.06. The ChiNext Index, which tracks China’s NASDAQ-style board of growth enterprises, dropped 2%, or 55.91 points, to close at 2783.94.

Shares of property developers ended mixed as investors temper their enthusiasm toward recent buying by domestic insurers in Chinese blue chips, including real-estate stocks. Poly Real Estate Group CO lost 0.1% while Gemdale Corp rose 2.5%.

Shares of brokerage houses advanced after Guotai Junan International Holdings said its chairman will resume his duties and Haitong Securities Co. halted a share buyback plan announced during the midst of the rout for mainland stocks. Citic Securities jumped 6.9% and Haitong Securities Co surged 3.4%. Guotai Junan Securities Co rallied 0.4%.

Hong Kong market rises for third day

The Hong Kong stock market advanced for third consecutive session on the back of positive lead from Wall Street overnight and amid renewed stimulus chatter in China. The benchmark Hang Seng Index advanced 210.57 points, or 0.96%, to 22040.59 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, added 151.42 points, or 1.56%, to 9882.95 points.

Shares of energy companies were top gainer in the city bourses, inline with rise in crude oil prices. The possibility of Chinese stimulus measures also lifted commodities, with copper rising 1.1% and iron ore surging more than 3%. Brent oil futures advanced 0.7% to US$36.59 a barrel. The grade fell to as low as US$36.04 on Monday, the least since July 2004. West Texas Intermediate futures for February rose as much as 0.9%. PetroChina (00857) added 3.3% to HHK$5.26. CNOOC (00883) grew 4% to HK$8.16. Sinopec Corp rose 4.5% to HK$4.84. China Shenhua added 2.7% to HK$12.24.

Shares of Mainland Headwear Holdings (01100) climbed up 23.6% to HK$1.52 after the Company expects to post significant increase in the profit of the Group for the year ending 31 December 2015, citing increase in contribution from the Manufacturing Business. The Bangladesh factory that had been at the investment stage has started to generate a contribution to this business arm, and its growing capacity substituted substantially for the decreased capacity of its Shenzhen factory. Better production control also contributes to the improvement in operational efficiency and costs control.

Shares of China Modern Dairy (01117) declined 2.5% to HK$1.92 after the company expects to post decline in profit for the financial year ending 31 December 2015, citing decline in the selling price of raw milk in China in the second half of 2015. Modern Dairy expects a loss on changes in the fair value less costs to sell of dairy cows of the Group in the financial year ended 31 December 2015, which may be greater as compared to Rmb329.1 million for the corresponding period in 2014.

Sensex, Nifty rebounds as CAD narrows

Indian stock markets were trading higher around late afternoon on positive global cues and due to narrowing current account deficit. Besides, covering-up of short positions by speculators boosted the sentiment. At 13:55 IST, the 30-share BSE index Sensex was up 1% to 25853 and the 50-share NSE index Nifty was up 1% to 7864. All BSE sectoral indices were trading in the green, with shares of metal, oil & gas, power and healthcare issues being major gainers.

The latest data showed that India’s current account deficit (CAD) declined to $8.2 billion or 1.6% of GDP in Q2 September 2015 from $10.9 billion or 2.2% of GDP in Q2 September 2014. On sequential basis, the CAD witnessed an increase from $6.1 billion or 1.2%% of GDP in Q1 June 2015. The RBI said that the decline in CAD in Q2 September 2015 on year-on-year basis was primarily on account of lower trade deficit.

Engineering and construction major L&T rose after the company’s construction division won orders worth Rs 1178 crore across various businesses in December 2015.

Ashoka Buildcon rose after the company said that one of its subsidiaries Ashoka Concessions has received letter of acceptance (LoA) from National Highways Authority of India (NHAI) for a project involving a section of NH 4 in Karnataka.

Shares of Dr. Lal PathLabs made a strong debut. The stock was currently hovering at Rs 783 on BSE, a premium of 42.36% compared to compared to the initial public offer price of Rs 550 per share. The stock debuted at Rs 717, a premium of 30.36% compared to IPO price.

Elsewhere in the Asia Pacific region: Taiwan’s Taiex index rose 0.3% to 8315.70. South Korea’s KOPSI grew 0.3% to 1999.22. New Zealand’s NZX50 added 0.8% to 6195.34. Indonesia’s Jakarta Composite index fell 0.2% to 4510.35. Malaysia’s KLCI jumped 0.9% to 1658.39. Singapore’s Straits Times index rose 0.4% at 2863. Japan market closed for a national holiday to celebrate the emperor’s birthday.